We study the Nash bargaining solution of a problem in which two agents bargain over an uncertain outcome. Under the assumptions of risk neutrality and of constant absolute risk aversion, we study the way that solution varies, ex ante, when we vary the beliefs of one agent. Changing an agent`s...

In an exchange economy with no aggregate uncertainty, and Bayesian agents, Pareto optimal allocations provide full insurance if and only if the agents have a common prior. It is hard to explain why there is relatively so little betting taking place. One is led to ask, when are full insurance...

We study the Nash bargaining solution of a problem in which two agents bargain over an uncertain outcome. Under the assumption of constant absolute risk aversion, we study the way that solution varies, ex ante, when we vary the beliefs of one agent. Changing an agent's beliefs in a way that...